Acting SEC Chair raises doubts on necessity of climate disclosure rule

Acting U.S. Securities and Exchange Commission (SEC) Chairman Mark Uyeda recently made an announcement that legal proceedings regarding the SEC’s climate disclosure rule would be delayed to allow for further considerations. Uyeda expressed concerns over the rule’s potential negative impact on capital markets and the economy, calling it “deeply flawed.”

This decision comes after Uyeda assumed the position of Acting Chair following the departure of Gary Gensler in January, who resigned after Donald Trump’s election. Even Trump’s nominee for SEC Chair, Paul Atkins, who is still awaiting confirmation, has shown opposition to the climate reporting rule.

During Gensler’s tenure, the SEC introduced new regulations in March 2024, marking the first time that U.S. public companies were required to disclose information about climate risks, their mitigation strategies, the financial consequences of extreme weather events, and in some cases, greenhouse gas emissions from their operations.

Uyeda, along with fellow Commissioner Hester Peirce, voted against the rule, arguing that the existing disclosure requirements were sufficient. They believed that the rule breached the SEC’s jurisdiction by delving into climate change matters.

Almost immediately after the rule was released, it faced several legal challenges. Nine court petitions were filed within a mere 10 days, including a lawsuit filed by 25 Republican state attorneys general led by Iowa AG Brenna Bird and an appeals court motion pushed by the U.S. Chamber of Commerce, seeking a stay on the regulations.

These petitions were consolidated in the Eighth Circuit court, prompting the SEC to announce in April a temporary halt on implementing the climate disclosure rule. Despite this pause, the SEC made it clear that it would vigorously defend the new requirements.

The SEC began defending the rule in court in August, arguing that the proposed disclosures in the rule offered pertinent information concerning investment value and that it fell within the Commission’s jurisdiction to mandate climate risk disclosures.

Unexpectedly, Uyeda expressed his opposition to the rule in a recent statement, highlighting discrepancies between his personal views and the SEC’s court submissions. He questioned the authority of the Commission to adopt the rule, raised concerns about its necessity, the assessment of costs versus benefits, and the processes followed during its adoption.

Acknowledging the change in the Commission’s perspective, Uyeda instructed the Commission staff to inform the court about these new circumstances and requested time to reflect and identify the appropriate next steps for the rule.